Federal income taxes on state and local government pensions would be capped.
Federal income taxes on state and local government pensions would be capped. People who receive these pensions would see their federal tax on that income limited to $10,000 for individuals. For married couples filing jointly, if both spouses receive such pensions, the limit would be $20,000. These changes would start with tax years beginning after December 31, 2025.
Currently, federal income tax on state and local government pensions is calculated at standard rates with no upper limit. This bill would cap the federal income tax on this pension income at $10,000 for individuals. For couples filing jointly, if both spouses receive such pensions, the cap would be $20,000. These changes would start with taxable years after December 31, 2025.
HR 9750 · 119th Congress · July 16, 2026 · AI Summary by gemini-2.5-flash · 9/10
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